Much literature has estimated the influence of rank on performance, and the effect is small (e.g., 1 rank position <= 1% more applicants/students), short-lived, and comparable to that in many other institutional domains. This estimation exercise, however, understates the much larger effect of metrification on the institutional structure, strategy, behavior and quality of research outputs associated with higher education. We explore one mechanism through which rankings create an uncertainty feedback loop for schools and students, and expands the market for the consulting professions that mitigate it.
I develop simulations comparing the impact of intermediary structure on the accuracy and heterogeneity of consumer opinion in mediated markets. In particular, I show that "opinion aggregators" tend to perform better than expert critics except in situations where experts have an extremely large comparative advantage in the accuracy of their quality estimates.
A second-wave of bureaucratization occurred in the early 20th century US railroads following public accounting reform, when CPAs and the ICC centralized the market for audited financial reports. Because new clerks were providing financial information to external constituents rather than costing information to managers, they produced no discernable gains to operating efficiency. However, clerk hiring did correspond to greater levels of capital investment, as financiers sought better information to aid their efforts to consolidate the industry.
I digitized large time-series, panel and cross-sectional datasets on the financials and labor force of the late 19th/early 20th century US railroads with the help of some friends.